Public Disclosure Authorized OFFICIAL DOCUMENTS CREDIT NUMBER 5580-RW Public Disclosure Authorized Financing Agreement (Social Protection System Development Policy Financing) between REPUBLIC OF RWANDA Public Disclosure Authorized and INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Dated d, 2015
CREDIT NUMBER 5580-RW FINANCING AGREEMENT AGREEMENT dated 30 %--AQ.-6, 2015, entered into between REPUBLIC OF RWANDA ("Recipient") and INT NATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing financing in support of the Program (as defined in the Appendix to this Agreement). The Association has decided to provide this financing on the basis, inter alia, of (a) the actions which the Recipient has already taken under the Program and which are described in Section LA of Schedule I to this Agreement, and (b) the Recipient's maintenance of an adequate macroeconomic policy framework. The Recipient and the Association therefore hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in an amount equivalent to forty seven million nine hundred thousand Special Drawing Rights (SDR 47,900,000) (variously, "Credit" and "Financing"). 2.02. The Recipient may withdraw the proceeds of the Financing in support of the Program in accordance with Section II of Schedule I to this Agreement. 2.03. The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one percent (3/4 of 1%). 2.05. The Payment Dates are February 15 and August 15 in each year. 2.06 The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. 2.07. The Payment Currency is Dollar.
-2- ARTICLE III - PROGRAM 3.01. The Recipient declares its commitment to the Program and its implementation. To this end: (a) (b) (c) the Recipient and the Association shall from time to time, at the request of either party, exchange views on the Recipient's macroeconomic policy framework and the progress achieved in carrying out the Program; prior to each such exchange of views, the Recipient shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Association shall reasonably request; and without limitation upon the provisions of paragraphs (a) and (b) of this Section, the Recipient shall nromptly inform the Association of any situation that would have t[ e effect of materially reversing the objectives of the Program or any action iaken under the Program including any action specified in Section I of Schedule I to this Agreement. ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01 The Additional Event of Suspension consists of the following, namely that a situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of the following, namely that the Association is satisfied with the progress achieved by the Recipient in carrying out the Program and with the adequacy of the Recipient's macroeconomic policy framework. 5.02. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is its minister responsible for finance. 6.02. The Recipient's Address is: Ministry of Finance and Economic Planning P. O. Box 158 Kigali Rwanda Facsimile: + 250-252-57-75-81
-3-6.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INDEVAS 248423(MCI) 1-202- 477-6391 Washington, D.C.
-4- AGREED at Kigali, Rwanda, as of the day and year first above written. REPUBLIC OF RWANDA By Authorized e Name: Title: INTERNATIONAL DEVELOPMENT ASSOCIATION orid By\ Authorized sen Name: Title:
-5- SCHEDULE I Program Actions; Availability of Financing Proceeds Section I. Actions under the Program A. Actions Taken Under the Program. The actions taken by the Recipient under the Program include the following: I. The Recipient has adopted a road map for the updating of the Ubudehe database to improve inter-operability across social protection and other poverty-targeted program databases. 2. The Recipient has engaged a technical committee to oversee the development and implementation of an improved management information system for the Main Social Protection Programs, and has approved short, medium and long term social protection management information system objectives. 3. The Recipient has issued policy guidelines to the Districts to eliminate duplication for households eligible to benefit from FARG and VUP direct support. 4. The Recipient has produced a consolidated budget for social protection identifying the program composition of' social protection in Rwanda. 5. The Recipient has approved an expanded staffing for Districts and Sectors to, among other things, strengthen citizen engagement in the delivery of social protection programs. 6. The Recipient has adopted a plan and committed budgetary resources in the national budget for the Fiscal Year 2014/15 to expand direct support and public works activities under the Vision 2020 Umurenge Program from two hundred and forty (240) Sectors to three hundred and thirty (330) Sectors, and from one hundred and eighty (180) Sectors to two hundred and ten (2 10) Sectors, respectively. 7. The Recipient has adopted procedures to enhance community participation in the Ubedehe household poverty classification process, and has launched the testing of a poverty scorecard to inform household poverty classifications. 8. The Recipient has conducted a policy study and identified policy options for improving gender and child sensitivity of social protection programs.
-6- Section II. Availability of Financing Proceeds A. General. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of this Section and such additional instructions as the Association may specify by notice to the Recipient. B. Allocation of Financing Amounts. The Financing is allocated in a single withdrawal tranche, from which the Recipient may make withdrawals of the Financing. The allocation of the amounts of the Financing to this end is set out in the table below: Allocations Amount of the Credit Allocated (expressed in SDR) Single Withdrawal Tranche 47,900,000 TOTAL AMOUNT 47,900,000 C. Withdrawal Tranche Release Conditions. No withdrawal shall be made of the Single Withdrawal Tranche unless the Association is satisfied (a) with the Program being carried out by the Recipient, and (b) with the adequacy of the Recipient's macroeconomic policy framework. ). Deposits of Financing Amounts. 1. The Recipient shall open, prior to furnishing to the Association the first request for withdrawal from the Financing Account, and thereafter maintain the following two deposit accounts ("Deposit Accounts'") at Banque Nationale du Rwanda on terms and conditions satisfactory to the Association: (a) a deposit account in United States Dollars ("Foreign Currency Deposit Account"); and (b) a deposit account in Rwandan Franc ("Local Currency Deposit Account"). 2. All withdrawals from the Financing Account shall be deposited by the Association into the Foreign Currency Deposit Account. Upon each deposit of an amount of the Financing into the Foreign Currency Deposit Account, the Recipient shall ensure deposit by Banque Nationale du Rwanda of the local currency equivalent amount into the Local Currency Deposit Account. The Recipient shall promptly, upon each withdrawal from the Financing Account, provide to the Association a report in form and substance satisfactory to the Association on the amounts deposited in the Foreign Currency Deposit Account and on the amounts deposited into the Local Currency Deposit Account with an indication of the exchange rate applied. All amounts withdrawn from the Local Currency Deposit Account shall be used exclusively for budgeted public expenditures and in compliance with Section F below.
-7- E. Audit. Upon the Association's request, the Recipient shall: 1. have both Deposit Accounts audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; 2. furnish to the Association as soon as available, but in any case not later than four (4) months after the date of the Association's request for such audit, a certified copy of the report of such audit, of such scope and in such detail as the Association shall reasonably request, and make such report publicly available in a timely fashion and in a manner acceptable to the Association; and 3. furnish to the Association such other information concerning the Deposit Accounts and their audit as the Association shall reasonably request. F. Excluded Expenditures. The Recipient undertakes that the proceeds of the Financing shall not be used to finance Excluded Expenditures. If the Association determines at any time that an amount of the Financing was used to make a payment for an Excluded Expenditure, the Recipient shall, promptly upon notice from the Association, refund an amount equal to the amount of such payment to the Association. Amounts refunded to the Association upon such request shall be cancelled. G. Closing Date. The Closing Date is March 31, 2016.
-8- SCHEDULE 2 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each February 15 and August 15, commencing February 15, 1.5625% 2021 to and including August 15, 2052 * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.03 (b) of the General Conditions.
-9- APPENDIX Section I. Definitions 1 "Banque Nationale du Rwanda- or "National Bank of Rwanda" means the central bank of the Recipient, established and operating pursuant to the Recipient's Law No. 55/2007 of July 30, 2007. 2. -Deposit Accounts" means both the Foreign Currency Deposit Account and the Local Currency Deposit Account. 3. "District" means an administrative subdivision of the Recipient, established pursuant to its Organic Law No.29/2005 of December 31, 2005. 4. "Excluded Expenditure" means any expenditure: (a) (b) for goods or services supplied under a contract which any national or international financing institution or agency other than the Association or the Bank has financed or agreed to finance, or which the Association or the Bank has financed or agreed to finance under another credit, grant or loan; for goods included in the following groups or sub-groups of the Standard International Trade Classification, Revision 3 (SITC. Rev.3), published by the United Nations in Statistical Papers, Series M. No. 34/Rev.3 (1986) (the SITC), or any successor groups or subgroups under future revisions to the SITC, as designated by the Association by notice to the Recipient:
- 10- Group Sub-group Description of Item 112 Alcoholic beverages 121 Tobacco, un-manufactured, tobacco refuse 122 Tobacco, manufactured (whether or not containing tobacco substitutes) 525 Radioactive and associated materials 667 Pearls, precious and semiprecious stones, unworked or worked 718 718.7 Nuclear reactors, and parts thereof; fuel elements (cartridges), non-irradiated, for nuclear reactors 728 728.43 Tobacco processing machinery 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971 Gold, non-monetary (excluding gold ores and concentrates) (c) for goods intended for a military or paramilitary purpose or for luxury consumption; (d) (e) for environmentally hazardous goods, the manufacture, use or import of which is prohibited under the laws of the Recipient or international agreements to which the Recipient is a party); on account of any payment prohibited by a decision of the United Nations Security Council taken under Chapter Vil of the Charter of the United Nations; and
- 11 - (f) with respect to which the Association determines that corrupt, fraudulent. collusive or coercive practices were engaged in by representatives of the Recipient or other recipient of the Financing proceeds, without the Recipient (or other such recipient) having taken timely and appropriate action satisfactory to the Association to address such practices when they occur. 5. "Foreign Currency Deposit Account" means the account referred to in Part D. I (a).of Section II of Schedule Ito this Agreement. 6. "Genocide Survivors Support Fund" or "FARG" means a fund of the Recipient established in 1998 to provide assistance to persons affected by the 1994 genocide. 7. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010 with the modifications set forth in Section 11 of this Appendix. 8. "Local Currency Deposit Account" means the account referred to in Part D. 1 (b) of Section If of Schedule I to this Agreement. 9. "Main Social Protection Programs" means the FARG, the VUP, the RDRP and the MINALOC Decentralised Program. 10. "MINALOC Decentralized Program" means a program implemented by the Ministry of Local Government of the Recipient in which small earmarked transfers are made to Districts for purposes of social protection. I1. "Ministry of Local Government" or "MINALOC" means the Recipient's ministry at the time responsible for social protection matters. 12. "Program" means the program of actions, objectives and policies designed to promote growth and achieve sustainable reductions in poverty and set forth or referred to in the letter dated December 3, 2014 fiom the Recipient to the Association declaring the Recipient's commitment to the execution of the Program, and requesting assistance from the Association in support of the Program during its execution. 13. "Rwanda Demobilization and Reintegration Program" or "RDRP" means a program of the Recipient formulated in 1997 and aimed at demobilizing ex combatants into their communities and supporting their economic and social reintegration. 14. "Sector" means an administrative subdivision of the Recipient, established pursuant to its Organic Law No. 29/2005 of December 31, 2005. 15. "Single Withdrawal Tranche" means the amount of the Financing allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part B of Section II of Schedule I to this Agreement. 16. "Ubudehe" means a community based process for identifying and categorizing households into poverty clusters. 17. "Vision 2020 Umurenge Program" or "VUP" means an integrated local development program of the Recipient inaugurated in 2007 which aims at accelerating poverty
- 12- reduction, rural growth and social protection by supporting the vulnerable and poor in society through provision of direct cash transfers, engagement in labor intensive public works and provision of microcredit. Section II. Modifications to the General Conditions The modifications to the General Conditions are as follows: I. The last sentence of paragraph (a) of Section 2.03 (relating to Applications for Withdrawal) is deleted in its entirety. 2. Sections 2.04 (Designated Accounts) and 2.05 (Eligible Expenditures) are deleted in their entirety, and the remaining Sections in Article II are renumbered accordingly. 3. Sections 4.01 (Project Execution Generally), and 4.09 (Financial Management Financial Statements; Audits) are deleted in their entirety, and the remaining Sections in Article IV are renumbered accordingly. 4. Paragraph (a) of Section 4.05 (renumbered as such pursuant to paragraph 3 above and relating to Use of'goods, Works and Services) is deleted in its entirety. 5. Paragraph (c) of Section 4.06 (renumbered as such pursuant to paragraph 3 above) is modified to read as follows: -Section 4.06. Plans. Documents; Records (c) The Recipient shall retain all records (contracts, orders, invoices, bills, receipts and other documents) evidencing expenditures under the Financing until two years after the Closing Date. The Recipient shall enable the Association's representatives to examine such records." 6. Section 4.07 (renumbered as such pursuant to paragraph 3 above) is modified to read as follows:.section 4.07. Program Monitoring and Evaluation (c) The Recipient shall prepare, or cause to be prepared, and furnish to the Association not later than six months after the Closing Date, a report of such scope and in such detail as the Association shall reasonably request, on the execution of the Program, the performance by the Recipient and the Association of their respective obligations under the Legal Agreements and the accomplishment of the purposes of the Financing." 7. The following terms and definitions set forth in the Appendix are modified or deleted as follows, and the following new terms and definitions are added in alphabetical order to the Appendix as follows, with the terms being renumbered accordingly: (a) The definition of the term -Eligible Expenditure" is modified to read as follows:
- 13 - "Eligible Expenditure' means any use to which the Financing is put in support of the Program, other than to Finance expenditures excluded pursuant to the Financing Agreement." (b) (c) The term "Financial Statements" and its definition as set forth in the Appendix are deleted in their entirety. The term "Project" is modified to read "Program" and its definition is modified to read as follows: "'Program' means the program referred to in the Financing Agreement in support of which the Financing is rnade.- All references to "Project" throughout these General Conditions are deemed to be references to "Program".